Tuesday, December 3, 2013

Sales Tax Break for Performance Art, But Only If It Is High Brow

The New York sales tax is imposed on most goods and some services. NY Tax Law section 1105(f)(1) provides that there is a sales tax on any "admissions charge" for the use of any "place of amusement" in New York, such as sporting events and amusement parks.

But there are several statutory exceptions not subject to sales tax:
1. race tracks,
2. boxing,
3. sparring or wrestling matches,
4. live circus performances,
5. motion picture theaters,
6. sporting activities in which such patron is to be a participant, such as bowling alleys and swimming pools,
7. dramatic or musical arts performances, defined as a "theatre, opera house, concert hall or other hall or place of assembly for a live dramatic, choreographic or musical performance" in in Tax Law section 1101(d)(1).

The taxpayer apparently lost because it could not prove that its employees performed in a sufficiently choreographed fashion, and furthermore the taxpayer's expert witness was not credible because he did not have any "personal knowledge or observation of 'private' dances" that happened at the club, which was an incredibly foolish oversight on the part of the expert witness.

The dissent noted that the legislature probably meant "choreographic" to be synonymous with "dance" and that it was unlikely for the legislature to intend to tax improvised dances. But the United States Supreme Court declined to review the case.

Perhaps the club should try to fit within one of the other statutory sales tax exceptions, such as "sparring or wresting matches" or "sporting activities in which such patron is to be a participant."